Wellington City Quarterly economic monitor - June 2020

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Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
-1.9%
-1.5%
-2.1%
Traffic flow
-13.1%
-11.7%
-9.4%
Health Enrolments
1.6%
1.7%
2.5%
Consumer spending
-7.0%
-3.0%
-2.8%
Residential consents
46.0%
19.5%
8.1%
Non-residential consents
12.1%
26.6%
-8.8%
House prices*
9.3%
10.9%
7.5%
House sales
-7.2%
-11.9%
-6.0%
Tourism expenditure
-17.3%
-14.4%
-12.3%
Car registrations
-9.9%
-12.8%
-19.3%
Commercial vehicle registrations
-25.2%
-21.4%
-24.6%
Jobseeker Support recipients
16.5%
12.5%
19.0%
Level
Unemployment rate
3.8%
3.9%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

The Wellington City economy contracted 14%pa in the June 2020 quarter, resulting in the provisional Infometrics GDP estimate for the city falling 1.9% in the June 2020 year. This fall compares with a 2.1% fall in GDP in the June 2020 year nationally, and a 1.5% fall across the Wellington region as a whole.

A big contributor to Wellington City’s contraction in GDP was a 32%pa fall in electronic card spending on retail purchases in the June 2020 quarter, which resulted in consumer spending over the June 2020 year falling 7.0%. With New Zealand’s borders remaining closed in the June quarter, tourism expenditure in Wellington City fell 17% in the June 2020 year. Car registrations in Wellington City were down 9.9% in the June 2020 year and commercial vehicle registrations fell 25% over the same period, reflecting weakness in consumers’ and businesses’ willingness to make major purchases in the face of economic uncertainty.

House sales fell 7.2% in the June 2020 year. However, with fewer properties on the market, house prices rose 9.3%pa in the June 2020 quarter. Building consents are a source of optimism. Residential consents rose 46% in the June 2020 year on the back of a particularly strong December 2019 quarter. Non-residential consents have been strong since mid-2019, growing 12% in the June 2020 year. If these consents translate into building work, this is good news for the city’s construction sector.

The contraction in the city’s economy led to a 16.5% jump in the number of Jobseeker Support recipients to 5,105 in the June 2020 year. This is the first time the number of recipients has topped 5,000 since our series began in 2010.

Overview of national economy

The New Zealand economy took a severe hit during the June 2020 quarter, as the COVID-19 pandemic saw the country locked down at home for around four weeks at Alert Level 4, before a rapid move down the Alert Levels to Level 1 in early June. The economy has endured a dramatic shift in focus, from life support at Level 4 to an adrenaline rush at Level 1. Yet the immediate economic ramifications are clear to see – economic activity has fallen, nearly 50,000 Kiwis lost their jobs, businesses struggled to cope with lower earnings, and incomes were reduced. The June quarter likely represents the largest single hit to the economy, but the economic scarring and restructuring will continue to occur over the coming years. New Zealand is not out of the woods yet.